Screening for Credit and Effect on Sales

What are some of the screening tools a company may use in screening candidates for credit thoroughly to ensure on time payment.

Also, Is there a risk to missing opportunities to increase sales by being to strict on the screening process and passing on credit customers?

Solution Preview

Companies have several options available to them when it comes to screening potential customers' credit history in an attempt to set up trade accounts for them. The cheapest and easiest screening activity to perform is a simple reference check. In this arrangement, the firm or person wanting credit with a company provides about three references. The company then checks with these references to determine whether they are worthy of offering credit to. Again, this system is virtually free, but there is the risk that anyone who provides references will only provide those with positive feedback to give. In addition, there are strict laws that govern the types of questions that can be asked in this scenario including credit limit, time the account has been open, ...

Solution Summary

The solution describes various tools to screen customers for credit and the result of screening too much upon sales.